City of Claremont Water Acquisition Process

City publication, December 14, 2104

2011 to the Present

The City of Claremont has been pursuing acquisition of the Claremont water system from Golden State Water Company, a private investor- owned utility company, for over three years. As an investor-owned water utility, Golden State is regulated by the California Public Utilities Commission. Currently, decisions on rates, operations, and capital improvements are made by the Commlssion in San Francisco with little input from ratepayers.

The Claremont water system serves the entire City of Claremont and small areas within the cities of Pomona, Montclair and Upland, and unincorporated Los Angeles County. The system includes approximately 11,000 service connections and serves about 35,000 people.

ln July of 2011, Golden State announced it would request a combined 29.4% rate increase for the years 2012-2014.Through letters, emails, and calls to City Hall, Claremont residents called on the City Council to take action. In response, the City Council commissioned an appraisal and feasibility study to determine the fair market value of the Claremont water system and evaluate the financial and practical feasibility of acquiring the system.

Based on the findings of these analyses, the City made an offer to purchase the system from Golden State for its fair market value of $55 million. Golden State has summarily rejected the City's offer, stating that the water system "is not for sale."

On November 8,2013, the City Council held a community town hall meeting to present the feasibility report findings to residents. The City Council voted unanimously to move forward in the acquisition process and directed staff to prepare documents including an Environmental Impact Report. In April 2014, the Council approved the Final Environmental Impact Report.

In June 2014, the Council voted to place a revenue bond measure on the November 4,2014 General Election Ballot for the purpose of financing an acquisition of the water system. Claremont voters approved the ballot measure by 7l%.

 

Eminent Domain Proceedings

A public agency may acquire private property for the public use through a legal process called eminent domain. The Claremont water system is as a matter of law dedicated to public use. The law has a presumption in favor of public agencies over private corporations operating property that is already subject to a public use. The law also allows for a wide range of public benefits and considerations to justify acquisition for public use that go beyond economics.

Resolution of Necessity
The first step in the eminent domain process is to hold a public hearing on the Resolution (s) of Necessity. The hearing focuses on certain issues including public interest and necessity for the project and acquisition. The City Council unanimously approved the Resolutions of Necessity on November 25,7014.

Filing of Eminent Domain Lawsuit
A lawsuit must be filed within 6 months after adoption of the Resolutions of Necessity to begin the eminent domain process. The City filed an eminent domain lawsuit on December 9,2014 in the Los Angeles Superior Court.

Eminent Domain Proceedings
The eminent domain legal process is complex and may take several years to complete. The process begins with the discovery phase in which both parties request information and documentation from the other party. Three major phases in the process are as follows:

Right to Take
Golden State Water has 30 days to respond to the lawsuit with a right to take challenge. lf GSW challenges the City's Right to Take, a trial would be held before a judge to determine the City's right to take the system.

Compensation
Following a right to take decision, a jury would review and decide on fair compensation for the system. Both parties would submit their system valuation. A jury trial may be waived if both parties agree to have a judge decide.

Appeal
Following a judgment, either party may appeal the decision.

Operation Plan & Rate Design
The City is finalizing an operational plan, financing plan and rate de- sign which will be presented for public input at future public meetings if the Council decides to acquire the system.

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